Is my pension age going up?

If you are in your 40s, you might not know that your pension age could be changing. If you’re not aware of this then you are certainly not alone! More than four in five people in their 40s are unaware that the age at which they can access their pension might be about to change, according to research from the Pensions Management Institute (PMI).

Under current rules and providing you don’t have certain health conditions, the earliest age at which you can access your pension pot (without incurring an unauthorised tax charge) is age 55. This is known as your normal minimum pension age (NMPA) and it’s set to rise from 55 to 57 in 2028, meaning that millions of people will have to wait an extra two years to access their retirement funds. The government’s plan is for the NMPA to track 10 years behind the state pension, and with further rises seemingly inevitable in years to come, there’s no better time to see where you can make improvements to your future pension planning.

Check your scheme rules

Certain schemes such as the armed forces, police and fire service are exempt from the rules and some members of private sector arrangements will also have a Protected Pension Age (PPA).

In future, if your pension scheme rules expressly state that your benefits can be drawn from age 55, you will still be able to do so without incurring an unauthorised tax charge. However, where the rules refer to the NMPA or its underlying legislation, it is more than likely that you will need to wait until age 57.

Most savers have more than one pension pot, so you can see it can get complicated! It’s a good idea to check with each of your pension scheme providers what access rights apply in your case and at what age.

So, just how will this affect my retirement plans?

After learning about the change in NMPA, almost four in ten (38%) of respondents to the PMI research said they expected to be impacted, while a further one in four were unsure whether the change would apply to them or not.

If you’re reading this then we’re pretty sure that you now have some idea that this could impact you, but as with most things financial, how this affects you will be different to others, and we believe that the key to over-coming this uncertainty is to have a good look under the bonnet of your current retirement plans.

PMI President Lesley Alexander called the research “particularly worrying.” She commented, “The failure to communicate the change to NMPA effectively is complicated by the fact that it does not apply to everyone. This means it is vital that the general public understands clearly what their retirement choices are. With the pensions dashboard due to arrive in 2023 – giving people the chance to review all their pension savings in a single place – it will only cause confusion when people learn that they will become eligible to draw benefits at different ages. The need for a new communication programme to explain this to the public has become urgent.”

Planning your financial future with a retirement expert

The PMI’s research also showed a wider lack of pension planning amongst those in their forties, with only 14% of respondents saying they had discussed their retirement plans with a financial adviser and only 4% of respondents knowing their current NMPA.

Our retirement experts would be delighted to have a conversation with you about how we can help. The first meeting is with our compliments, so please get in touch today.

In the meantime, we’ve also produced a handy calculator which can help you look at what your current pension provision is  and we’d recommend that you gain an understanding of what your state pension entitlement is by clicking here.